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TMI Blog2023 (3) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... act that an arbitral award has been passed in favour of Devas and the same is under challenge in a petition under Section 34 of the Arbitration Act. The Apex Court has repelled the contention of Devas that the application for winding up was filed only to circumvent the enforcement of the arbitral award. Without the findings rendered by the Apex Court regarding fraud, the Apex Court could not have come to the conclusion that Devas had been incorporated for fraudulent purposes and that its affairs were being conducted in a fraudulent manner and, therefore, the order of winding up Devas under Section 271(c) of the Companies Act, 2013 was correct. These findings, therefore, become the ratio and not the obiter of the case and therefore, were binding on the learned Single Judge under Article 141 of the Constitution of India. It is settled law that even obiter of a judgment of the Hon ble Supreme Court is binding on all Courts subordinate to it. The Apex Court in PEERLESS GENERAL FINANCE INVESTMENT CO. LTD. VERSUS RESERVE BANK OF INDIA [ 1992 (1) TMI 337 - SUPREME COURT] has reiterated that though the focus of the Apex Court may not be directly on a partiuclar point, yet, a pronouncement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the case so warrant and it is so required in the interest of justice. e) In view of the various Judgments of the Hon ble Supreme Court interpreting Section 34 of the Arbitration Act, the amendments to Section 34 of the Arbitration Act and in view of the categorical findings of the Apex Court in its Judgment passed in DEVAS MULTIMEDIA PRIVATE LTD. , nothing prevented the learned Single Judge from relying on those findings and using them for the purpose of setting aside the ICC Award under Section 34 of the Arbitration Act on the ground that the agreement itself was a product of fraud and, therefore, the making of award is automatically induced by fraud and corruption. The findings by the Apex Court, which is the highest Court of the land, could not have been ignored by the learned Single Judge and those findings would automatically become the findings of the learned Single Judge while considering an application under Section 34 of the Arbitration Act for which there was no necessity of a specific pleading. From a comprehensive reading of the Impugned Judgment, it is evident that the learned Single Judge has applied his mind to the amendment applications and has taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment") passed by the Learned Single Judge in O.M.P. (Comm.) No. 11/2021, filed by Respondent No. 1 ("Antrix") under Section 34 of the Arbitration Act (hereinafter referred to as "Section 34 Petition") to challenge the ICC Arbitral Award dated 14.09.2015 (hereinafter referred to as "the ICC Award") passed in favour of the Respondent No. 2 ("Devas"). The Ld. Single Judge, vide the Impugned Judgment has set aside the ICC Award under Section 34 of the Arbitration Act on the grounds that it suffers from fraud, patent illegality and is in conflict with the public policy of India. BRIEF BACKGROUND 2. The Appellant herein ("Devas Employees Mauritius Pvt. Ltd." or "DEMPL") is a company incorporated under the laws of Mauritius and is a shareholder, owning 3.48% of the issued and paid-up equity share capital of Respondent No. 2/ Devas Multimedia Private Limited ("Devas"). Respondent No. 2 is a company incorporated under the Companies Act, 1956 which has since been wound up under the provisions of the Companies Act, 2013 and is represented in the present proceedings through its Official Liquidator. 3. The Respondent No.1/Antrix Corporation Limited, is a company incorporated under the Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivers including mobile phones, mobile video/audio receivers for vehicles etc. Antrix was to lease out to Devas five numbers of C X S transponders, each of 8.1 MHz capacity, and five numbers of S X C transponders, each of 2.7 MHz capacity, on the Primary Satellite 1 (PS1). It was agreed that the leased capacity would be delivered by Antrix to Devas, i.e. a fully operational and ready PS-1 satellite was to be delivered within 30 months of the agreement, with a further grace period of six months. Devas obtained approvals from the Foreign Investment Promotion Board (FIPB) during the period between May 2006 and September 2009. It is stated that Devas also obtained an Internet Service Provider (ISP) License from the Department of Telecommunications on 02.05.2008. Devas then also obtained permission from the Department of Telecommunications on 31.03.2009 for providing Internet Protocol Television (IPTV) Services within the scope of the terms and conditions of Internet Service Provider (ISP) License. 5. The Agreement dated 28.01.2005 was terminated by Antrix by a Communication dated 25.02.2011 which stated that the Government of India had taken a policy decision not to provide orbital slo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Central Bureau of Investigation ("CBI") registered an FIR on 16.03.2015 alleging criminal conspiracy, criminal misconduct, cheating and other corrupt practices on the part of Devas and its officers. A charge-sheet in respect of the FIR was filed against Devas, its officers and certain other individuals by the CBI on 11.08.2016. The CBI filed a supplementary charge-sheet in respect of the FIR on 08.01.2019. 9. Subsequent to the publishing of the ICC Award, on 19.11.2015, Antrix filed a petition under Section 34 of the Arbitration Act before the Addl. City Civil and Sessions Judge, Bengaluru, Karnataka, challenging the ICC Award. Subsequently, on 10.11.2016, Antrix filed an amendment application (hereinafter referred to as the "first amendment application") to incorporate subsequent events and take additional grounds. Thereafter, on 04.11.2020, the Hon'ble Supreme Court passed an order in SLP No. 28434/2018 to transfer the Petition filed by Antrix under Section 34 of the Arbitration Act from the Court in Bengaluru to the Delhi High Court and stayed the ICC Award in the interim. On 12.01.2021, Antrix filed another amendment application (hereinafter referred to as the "second am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... send wrong message to international investors, namely that by adopting fraudulent means and by bringing into India an investment in a sum of INR 579 crores, the investors can hope to get tens of thousands of crores of rupees, even after siphoning off INR 488 crores. 11. It is in the aforestated factual background that the Ld. Single Judge has pronounced the Impugned Judgment under Section 34 of the Arbitration Act by which the ICC Award has been set aside on the grounds that the ICC Award suffers from patent illegality, fraud and is in conflict with the public policy of India. The learned Single Judge has placed reliance upon the Judgment of the Apex Court passed in Civil Appeal No.5766/2021. The learned Single Judge held that the Judgment of the Apex Court passed in Civil Appeal No.5766/2021 deals with the same parties and the finding therein would operate as res judicata. The learned Single Judge also held that the Judgments are admissible and the Court is bound to take judicial notice of the same. The learned Single Judge held that the since the issue of fraud has been established by the Judgment of the Apex Court in Civil Appeal No.5766/2021, it would operate as res judicata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for DEMPL on the question of delay in seeking amendment of the objections are not applicable to the facts of the present case. 164. The Supreme Court of India in Delhi Airport Metro Express (P) Ltd. v. DMRC, (2022) 1 SCC 131 examined the scope of judicial interference with the arbitral awards and held as under: "27. For a better understanding of the role ascribed to Courts in reviewing arbitral awards while considering applications filed under Section 34 of the 1996 Act, it would be relevant to refer to a judgment of this Court in Ssangyong Engg. & Construction Co. Ltd. v. NHAI [Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 : (2020) 2 SCC (Civ) 213] wherein R.F. Nariman, J. has in clear terms delineated the limited area for judicial interference, taking into account the amendments brought about by the 2015 Amendment Act. The relevant passages of the judgment in Ssangyong [Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 : (2020) 2 SCC (Civ) 213] are noted as under : (SCC pp. 169-71, paras 34-41) '34. What is clear, therefore, is that the expression "public policy of India", whether contained in Section 34 or in Section 48, would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12], as understood in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], and paras 28 and 29 in particular, is now done away with. 37. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2-A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within "the fundamental policy of Indian law", namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality. 38. Secondly, it is also made clear that reappreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minds. However, the difficulty arises in applying the well-established principles for interference to the facts of each case that come up before the Courts. There is a disturbing tendency of Courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award. This approach would lead to corrosion of the object of the 1996 Act and the endeavours made to preserve this object, which is minimal judicial interference with arbitral awards. That apart, several judicial pronouncements of this Court would become a dead letter if arbitral awards are set aside by categorising them as perverse or patently illegal without appreciating the contours of the said expressions. 29. Patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression "patent illegality". Likewise, erroneous application of law cannot be categorised as patent i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. General Electric Co., 1994 Supp (1) SCC 644]. In Renusagar [Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644], this Court observed that violation of the Foreign Exchange Regulation Act, 1973, a statute enacted for the "national economic interest", and disregarding the superior Courts in India would be antithetical to the fundamental policy of Indian law. Contravention of a statute not linked to public policy or public interest cannot be a ground to set at naught an arbitral award as being discordant with the fundamental policy of Indian law and neither can it be brought within the confines of "patent illegality" as discussed above. In other words, contravention of a statute only if it is linked to public policy or public interest is cause for setting aside the award as being at odds with the fundamental policy of Indian law. If an arbitral award shocks the conscience of the court, it can be set aside as being in conflict with the most basic notions of justice. The ground of morality in this context has been interpreted by this Court to encompass awards involving elements of sexual morality, such as prostitution, or awards seeking to validate agreements wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings on fraud returned by the Supreme Court by its Judgment dated 17.01.2022 clearly establish that award contravenes the fundamental policy of Indian law being in conflict with the most basic notions of justice and is also contrary to the national economic interest having also violated the 'FIPB Policies' and the provisions of 'FIMA' and 'PMLA' and thus antithetical to the fundamental policy of Indian law. 171. The Supreme Court by its judgment dated 17.01.2022 has held that the very seeds of the commercial relationship between Antrix and Devas were a product of fraud perpetrated by Devas and thus every part of the plant that grew out of those seeds, such as the Agreement, the disputes, arbitral awards etc., are all infected with the poison of fraud. 172. It has held that a product of fraud is in conflict with the public policy of any country including India. The basic notions of morality and justice are always in conflict with fraud and that allowing Devas and its shareholders to reap the benefits of their fraudulent action, would send another wrong message namely that by adopting fraudulent means and by bringing into India an investment in a sum of INR 579 crores, the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the inversion test propounded by Professor Wambaugh to identify the ratio decidendi of a judgment. The inversion test has been followed by courts to imply that the ratio decidendi includes those propositions which are absolutely necessary for the decision of the case. He, therefore, contends that paragraphs 13.5 and 13.6 of the judgment of the Apex Court do not constitute ratio decidendi, and hence was not binding upon the learned Single Judge while deciding a challenge to an award under Section 34 of the Arbitration Act. 16. Mr. Dutt further relies upon the decision of the Apex Court in Divisional Controller v. Mahadeva Shetty, (2003) 7 SCC 197, to argue that the scope and authority of a precedent should not be expanded by a court beyond the needs of a given situation and the only thing binding as an authority upon courts is the principle upon which the case is decided. Casual expressions by a Judge cannot be considered to be ratio decidendi and would at best constitute obiter dicta and thus cannot be considered to be binding upon Courts. 17. Mr. Dutt submits that the Apex Court, while deciding the Civil Appeal No.5766/2021, arising out of an Order passed by NCLAT, was concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of the Apex Court in Municipal Committee, Amritsar v. Hazara Singh, (1975) 1 SCC 794. He states that statements in the Judgment which constitute obiter dicta would not be binding upon the High Court under Article 141 of the Constitution of India. He states that the findings on fraud arrived at by the Supreme Court, being findings of fact would not be binding upon the Ld. Single Judge under Article 141 of the Constitution while dealing with a petition under Section 34 of the Arbitration Act. It is his submission that as a consequence of the aforesaid, the applicability of Section 57 of the Evidence Act to the proceedings under Section 34 of the Arbitration Act would not arise. 21. It is stated by Mr. Dutt that the decision of the Hon'ble Supreme Court in Peerless General Finance and Invest Company Ltd. v. CIT, (2020) 18 SCC 625, is consistent with the decision in Hazara Singh (supra). He submits that the statement in Peerless (supra) that a pronouncement of law, even though not the ratio of the judgment of the Hon'ble Supreme Court, would be binding upon a High Court, is in the context of Article 141 of the Constitution of India, and cannot be interpreted in a manner to mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Arbitration Act on 19.11.2015, indicate that Antrix had elected not to take fraud as a ground to challenge the ICC Award. 26. It is further submitted by Mr. Dutt that while the CBI registered its FIR against Devas and its officials on 16.03.2015, the Petition under Section 34 was filed by Antrix only on 19.11.2015, that is eight (8) months after the date of registration of the FIR. He states that while the first amendment application was filed on 10.11.2016, the second amendment application was filed on 12.01.2021 to introduce the ground of fraud as a challenge to the ICC Award in the Section 34 Petition, and the same has not been decided by the learned Single Judge. He submits that the FIR registered by the CBI contains all the material facts that Antrix sought to introduce by way of its two amendment applications. He further submits that the learned Single Judge has overcome the argument of delay in introducing the grounds of fraud by placing reliance on the findings of the Apex Court in its Judgment passed in Civil Appeal No.5766/2021. He submits that had the application for amendment of petition under Section 34 of the Arbitration Act been argued, the same was liable to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30. Mr. Dutt argues that the ground of fraud to challenge the ICC Award under the Section 34 Petition has been introduced by Antrix by way of two amendment applications, both of which have been filed beyond the prescribed period of 3 months and 30 days provided for under Section 34(3) of the Arbitration Act has passed, and the applications are thus barred by limitation. He submits that for setting aside an arbitral award under Section 34 of the Arbitration Act, no ground of challenge can be raised after the time limit prescribed under Section 34(3) Arbitration Act. He relies upon the decision in Bhaven Construction v. Sardar Sarovar Narmada Nigam Ltd., (2022) 1 SCC 75, and P. Radha Bai v. P. Ashok Kumar, (2019) 13 SCC 445, in support of this argument. Mr. Dutt submits that the limitation period under Section 34(3) of the Arbitration Act commences from the date on which a party receives the arbitral award and has knowledge of the award. The only relevant fact in consideration, therefore, is the date of the receipt of the award and whether there was any fraud in the delivery of the award. He submits that the receipt of a chargesheet, supplementary chargesheet etc. is an irrelevant c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties in both the proceedings are the same since the parties in the winding up proceedings and in the present case are Devas, Antrix and DEMPL. Fourthly, the decision in the former proceedings was made by a competent court. He states that the Apex Court being the highest court in the country was competent to decide the appeal filed against the order of the NCLAT which had upheld the order of the NCLT which in turn had allowed the application under Section 271 of the Companies Act, 2013 for winding up of Respondent No.2 on the ground that the company had been formed for a fraudulent purpose and that the affairs of the company were being conducted in a fraudulent manner. Lastly, the decision of the Hon'ble Supreme Court dated 17.01.2022 in Civil Appeal No.5766/2021 has attained finality and had been delivered after hearing all the parties. The learned ASG, therefore, submits that the law laid down by the Apex Court in various cases applies to the present case. He states that the findings of the Apex Court pertaining to the fraudulent actions of Devas, the Devas Agreement and the Arbitral Award, in the decision of the Apex Court in Civil Appeal No.5766/2021 arising out of proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dalone paragraphs. He places reliance upon the decision in Director of Settlements, A.P. and Others v. M.R. Apparao, (2002) 4 SCC 638, and State of Haryana v. Ranbir Alias Rana, (2006) 5 SCC 167, to buttress his argument. 35. Without prejudice to the aforesaid argument, the Ld. ASG argues that even an obiter of the Hon'ble Supreme Court is binding under Article 141 of the Constitution on the High Courts. He relies upon the decision in Peerless General Finance and Investment Company Ltd. v. CIT, (2020) 18 SCC 625, to support this argument. The learned ASG, therefore, submits that the learned Single Judge was bound by the findings of the Apex Court on fraud under Article 141 of the Constitution of India. He states that the contention of the Appellant that these are only findings on fact and, therefore, would not be covered by Article 141 of the Constitution of India, is not tenable. 36. The Ld. ASG has directed the attention of this Court towards paragraphs 12.8(i), 12.8(iii), 12.8(vi), 12.8(vii), 12.8(viii) and 12.8(ix) of the decision of the Apex Court in Civil Appeal No.5766/2021wherein the Supreme Court has upheld certain findings on fact made by the NCLT and NCLAT in their Ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dge are the same, and if the plea of limitation has been rejected by the Apex Court, the learned Single Judge has not made an error as the question of limitation is a mixed question of fact and law. 39. Learned ASG submits that the initial application under Section 34 of the Arbitration Act was filed within the time period specified under Section 34(3) of the Arbitration Act. He submits that the Arbitration Act does not prescribe a time period within which an amendment application to a Petition under Section 34 of the Arbitration Act must be filed. He submits that the aforesaid provision applies only to the initial application filed under Section 34(1) of the Arbitration Act and not to amendment applications filed subsequently. 40. The Ld. ASG places reliance upon the decision of the Hon'ble Supreme Court in State of Maharashtra v. Hindustan Construction Company Limited, (2010) 4 SCC 518, to submit that the Courts have discretion to permit an amendment application in a petition under Section 34 of the Arbitration Act if the initial application has been filed within time and allowing the amendment application would be in the interest of justice. It cannot be the intention of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Contract Act, 1872 read with Section 271(c) of the Companies Act, 2013, and thus constitutes statutory fraud. c. Public Fraud against the Nation and its exchequer - The Ld. ASG submits that the Apex Court in paragraphs 9.13, 9.15, 13.1 and 13.5 of its Judgment passed in Civil Appeal No.5766/2021 establish that Devas and DEMPL have committed a public fraud against the nation and its exchequer and, thus, cannot be permitted to reap the benefit of their fraud. He, therefore, submits that the findings on fraud rendered by the Apex Court in its Judgment passed in Civil Appeal No.5766/2021 staring at its face, the learned Single Judge was bound by those findings and could not have upheld an award which is the outcome of an agreement which was fraudulent in nature from its inception. 43. The Ld. ASG has contended that the award is in conflict with the public policy of India which is a ground to set aside an Arbitral Award under Section 34 of the Arbitration Act. He submits that the phrase "conflict with the public policy of India" found in Section 34(2)(b) of the Arbitration Act was first interpreted by the Hon'ble Supreme Court in ONGC v. Saw Pipes, (2003) 5 SCC 705, which has read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question as to whether the making of the award was induced or affected by fraud or corruption or is in contravention with the public policy of Indian law without any pleadings or any findings by the Tribunal or any pleading in the application moved under Section 34 of the Arbitration Act. He suggests that the power of the Court is not circumscribed by pleadings while deciding the question arising under Section 34(2)(b) of the Arbitration Act. He submits that fetters cannot be put upon the exercise of this power when the Parliament has not placed any such limitation on it. He submits that the powers of the Court under Section 34 and 37 are broad and should not be interpreted in a narrow manner. 46. It is submitted by the Ld. ASG that in the facts of the present case, Section 34(2)(b)(ii) is clearly applicable and the Ld. Single Judge has correctly set aside the award for being in conflict with the public policy of India. He submits that when the Impugned Award is read with the judgment of the Hon'ble Supreme Court in Civil Appeal No.5766/2021. He states that the finding arrived at by the Arbitral Tribunal in the award is contrary to the finding of the Supreme Court. He further sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmitted to reap the benefits of the ICC Award, after the Apex Court has given a finding that Devas was formed for a fraudulent purpose and its affairs were being conducted in a fraudulent manner, it would lead to an absurdity. He submits that the facts surrounding the fraudulent actions of Devas and DEMPL have attained finality and the parties must face the consequences. 51. The learned ASG further contended that Article 144 of the Constitution of India mandates that all authorities shall act in aid of the Supreme Court of India. He states that once the Apex Court had given a finding that the company was incorporated for a fraudulent and unlawful purpose and the affairs of the company have been conducted in a fraudulent manner, then while testing the correctness of an award which has decided the rights and liabilities of parties to an agreement which has been held to be affected by fraud, the learned Single Judge could not have proceeded as if the award is valid in the eyes of law as this would go against the grain of Article 144 of the Constitution of India. Rejoinder submissions by the Appellant/DEMPL 52. It is submitted by Mr. Dutt that Respondent No. 1 cannot be permitted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Constitution of India is inapplicable to the present case. 55. In order to decide the issue at hand in a constructive manner, it is only appropriate that this Court deals with the each of the aforesaid aspects individually. 56. It is the submission of the Appellants that paragraphs Nos.13.5 & 13.6 of the judgment passed by the Apex Court in Civil Appeal No.5766/2021 only constitute obiter dicta and not ratio decidendi. Paragraph 13 of the said judgment reads as under: "13. Miscellenous Grounds 13.1 Apart from the above main grounds of attack, which we have dealt in extenso, the learned senior counsel for the appellants also made a few supplementary submissions. One of them was that a lis between two private parties cannot become the subject matter of a petition under Section 271(c). But this argument is to be rejected outright, in view of the fact that the claims of Devas and its shareholders are also on the property of the Government of India. The space segment in the satellite proposed to be launched by the Government of India, is the property of the Government of India. In fact, the shareholders have secured two awards against the Republic of India under BIT. Therefore, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual motive behind Antrix seeking the winding up of Devas, is to deprive Devas, of the benefits of an unanimous award passed by the ICC Arbitral tribunal presided over by a former Chief Justice of India and the two BIT awards and that such attempts on the part of a corporate entity wholly owned by the Government of India would send a wrong message to international investors. 13.5 We do not find any merit in the above submission. If as a matter of fact, fraud as projected by Antrix, stands established, the motive behind the victim of fraud, coming up with a petition for winding up, is of no relevance. If the seeds of the commercial relationship between Antrix and Devas were a product of fraud perpetrated by Devas, every part of the plant that grew out of those seeds, such as the Agreement, the disputes, arbitral awards etc., are all infected with the poison of fraud. A product of fraud is in conflict with the public policy of any country including India. The basic notions of morality and justice are always in conflict with fraud and hence the motive behind the action brought by the victim of fraud can never stand as an impediment. 13.6 We do not know if the action of Antrix in se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was decided therein, there are two observations of a general character which I wish to make, and one is to repeat what I have very often said before, that every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. The other is that a case is only an authority for what it actually decides. I entirely deny that it can be quoted for a proposition that may seem to follow logically from it. Such a mode of reasoning assumes that the law is necessarily a logical code, whereas every lawyer must acknowledge that the law is not always logical at all." It is not a profitable task to extract a sentence here and there from a judgment and to build upon it…." (emphasis supplied) 58. Thereafter, in Municipal Committee v. Hazara Singh, (1975) 1 SCC 794, upon which Mr. Dutt has placed heavy reliance during the course of the proceedings, it has been held: "4. It is plain from submission of counsel that the appellant's grie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at does not mean that every statement contained in a judgment of that Court would be attracted by Article 141. Statements on matters other than law have no binding force. Several decisions of the Supreme Court are on facts and that Court itself has pointed out in Gurcharan Singh v. State of Punjab [1972 FAC 549] and Prakash Chandra Pathak v. State of Uttar Pradesh [AIR 1960 SC 195 : 1960 Cri LJ 283] that as on facts no two cases could be similar, its own decisions which were essentially on questions of fact could not be relied upon as precedents for decision of other cases.…" (emphasis supplied) 59. In Krishena Kumar v. Union of India, (1990) 4 SCC 207, another Constitution Bench of the Hon'ble Supreme Court highlighted how the ratio decidendi of a judgment may be ascertained. The Court in its decision held as under: "20. In other words, the enunciation of the reason or principle upon which a question before a court has been decided is alone binding as a precedent. The ratio decidendi is the underlying principle, namely, the general reasons or the general grounds upon which the decision is based on the test or abstract from the specific peculiarities of the particular cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e found there is not intended to be exposition of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. It would, therefore, be not profitable to extract a sentence here and there from the judgment and to build upon it because the essence of the decision is its ratio and not every observation found therein. The enunciation of the reason or principle on which a question before a court has been decided is alone binding as a precedent. The concrete decision alone is binding between the parties to it, but it is the abstract ratio decidendi, ascertained on a consideration of the judgment in relation to the subject-matter of the decision, which alone has the force of law and which, when it is clear what it was, is binding. It is only the principle laid down in the judgment that is binding law under Article 141 of the Constitution. A deliberate judicial decision arrived at after hearing an argument on a question which arises in the case or is put in issue may constitute a precedent, no matter for what reason, and the precedent by long recognition may mature into rule of stare decisis. It is the rule deductible from the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Article 141 would, therefore, extend to all observations of points raised and decided by the Court in a given case. So far as constitutional matters are concerned, it is a practice of the Court not to make any pronouncement on points not directly raised for its decision. The decision in a judgment of the Supreme Court cannot be assailed on the ground that certain aspects were not considered or the relevant provisions were not brought to the notice of the Court (see Ballabhadas Mathurdas Lakhani v. Municipal Committee, Malkapur [(1970) 2 SCC 267 : AIR 1970 SC 1002] and AIR 1973 SC 794 [ (sic)] ). When the Supreme Court decides a principle it would be the duty of the High Court or a subordinate court to follow the decision of the Supreme Court. A judgment of the High Court which refuses to follow the decision and directions of the Supreme Court or seeks to revive a decision of the High Court which had been set aside by the Supreme Court is a nullity. (See Narinder Singh v. Surjit Singh [(1984) 2 SCC 402] and Kausalya Devi Bogra v. Land Acquisition Officer [(1984) 2 SCC 324] .) …" (emphasis supplied) 62. In Divisional Controller, KSRTC v. Mahadeva Shetty, (2003) 7 SCC 197, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be found out only on reading the entire judgment. In fact, the ratio of the judgment is what is set out in the judgment itself. The answer to the question would necessarily have to be read in the context of what is set out in the judgment and not in isolation. In case of any doubt as regards any observations, reasons and principles, the other part of the judgment has to be looked into. By reading a line here and there from the judgment, one cannot find out the entire ratio decidendi of the judgment. We, therefore, while giving our clarifications, are disposed to look into other parts of the judgment other than those portions which may be relied upon." Sinha, J., speaking for himself, gave a concurring decision and stated as under: "139. A judgment, it is trite, is not to be read as a statute. The ratio decidendi of a judgment is its reasoning which can be deciphered only upon reading the same in its entirety. The ratio decidendi of a case or the principles and reasons on which it is based is distinct from the relief finally granted or the manner adopted for its disposal. (See Executive Engineer, Dhenkanal Minor Irrigation Division v. N.C. Budharaj [(2001) 2 SCC 721].) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a court has been decided is alone binding as a precedent. (See State of Orissa v. Sudhansu Sekhar Misra [(1968) 2 SCR 154 : AIR 1968 SC 647] and Union of India v. Dhanwanti Devi [(1996) 6 SCC 44].) A case is a precedent and binding for what it explicitly decides and no more. The words used by Judges in their judgments are not to be read as if they are words in an Act of Parliament. In Quinn v. Leathem [1901 AC 495 : 85 LT 289 : (1900-03) All ER Rep 1 (HL)] the Earl of Halsbury, L.C. observed that every judgment must be read as applicable to the particular facts proved or assumed to be proved, since the generality of the expressions which are found there are not intended to be the exposition of the whole law but governed and qualified by the particular facts of the case in which such expressions are found and a case is only an authority for what it actually decides." (emphasis supplied) 65. The Hon'ble Supreme Court in State of Haryana v. Ranbir, (2006) 5 SCC 167, has expounded upon the meaning and binding effect of obiter dicta in a decision. The relevant extracts of the decision read as under: "12. It is in that context the Court clearly came to the opinion that the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning ratio decidendi and obiter dictum, the Hon'ble Supreme Court has stated as under: "21. Since heavy reliance has been placed by the State on Satendra Prasad Jain v. State of U.P. [Satendra Prasad Jain v. State of U.P., (1993) 4 SCC 369] and Lt. Governor of H.P. v. Avinash Sharma [Lt. Governor of H.P. v. Avinash Sharma, (1970) 2 SCC 149], we must sedulously determine their ratios. This would, therefore, be the apposite time and place for a brief discussion on the contours and connotations of the term "ratio decidendi", which in Latin means "the reason for deciding". According to Glanville Williams in Learning the Law, this maxim "is slightly ambiguous. It may mean either (1) rule that the Judge who decided the case intended to lay down and apply to the facts; or (2) the rule that a later court concedes him to have had the power to lay down". In G.W. Paton's' Jurisprudence, ratio decidendi has been conceptualised in a novel manner, in that these words are "almost always used in contradistinction to obiter dictum. An obiter dictum, of course, is always something said by a Judge. It is frequently easier to show that something said in a judgment is obiter and has no bindin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... baugh, The Study of Cases (Boston: Little, Brown & Co., 1892) at p. 17.]" 114. In order to test whether a particular proposition of law is to be treated as the ratio decidendi of the case, the proposition is to be inversed i.e. to remove from the text of the judgment as if it did not exist. If the conclusion of the case would still have been the same even without examining the proposition, then it cannot be regarded as the ratio decidendi of the case. This test has been followed to imply that the ratio decidendi is what is absolutely necessary for the decision of the case. "In order that an opinion may have the weight of a precedent", according to John Chipman Grey [ Another distinguished jurist who served as a Professor of Law at Harvard Law School.], "it must be an opinion, the formation of which, is necessary for the decision of a particular case"." 68. Recently, in Peerless General Finance & Investment Co. Ltd. v. CIT, (2020) 18 SCC 625, it has been expressed that in a judgment of the Supreme Court, even pronouncements which may not strictly be construed to be ratio, would be binding upon the High Court. The relevant extract of the aforesaid decision reads as under: "11. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... context of the facts of the decision, and it is essentially the application of law to the facts of a particular case. An observation on facts by a Court cannot be considered to be the ratio of a judgment. It is the general principles on which the decision is based and would include a pre-existing rule/law, which may be statutory or judge-made, and a minor premise of the facts of the particular case in consideration. Every point raised in issue before the court which is argued and decided by the Court would form a part of the ratio of the decision. 69.3 A judgment is not to be read in the manner in which a statute is to be read, and thus a judgment may not explicitly spell out the ratio of a particular decision. It is not necessary for a judge to expressly state what the ratio of a particular decision is, it can be abstract in nature and must be inferred or interpreted by reading the judgment as a whole, and in certain cases, the pleadings of the parties. 69.4 A judgment may be based on multiple reasons, in which case all such reasons assigned by a Judge for giving a decision would form a part of the ratio of the decision. The subsequent Judge cannot choose one reason to constitut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted before it. 71. It is also pertinent to mention at this juncture that the Apex Court had also analysed the facts and the documents which were placed before the NCLT/NCLAT, the authenticity of which were never questioned or denied by Devas. This is apparent from a reading of Paragraph 12.8 of the Apex Court's Judgment passed in Civil Appeal No.5766/2021 Relevant portions of Para 12.8 of the said judgment reads as under: "12.8. ...... (iii) But the documents filed by the appellants themselves show that a power point presentation was made by Forge LLC on 22.03.2004, proposing an Indian joint venture to launch what came to be known as DEVAS (which perhaps ultimately turned out to be ASURAS23). It was claimed in the said proposal that DEVAS platform will be capable of delivering multimedia and information services via satellite to mobile devices tailored to the needs of various market segments such as consumer segment, commercial segment and social segment. This presentation dated 22.03.2004 was followed by a proposal dated 15.04.2004, about which we have made a brief mention in paragraph 3.4 above. This proposal obliged ISRO/Antrix to invest in one operational S-band Satell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement by promising to provide something that was not in existence at that time and which did not come into existence even later; (c) that the licenses and approvals were for completely different services; and (d) that the services offered were not within the scope of SATCOM Policy etc. are actually borne out by records; (vii) There is no denial of the fact that Devas offered a bouquet of services known as (a) Devas Services through a device called (b) Devas device in a hybrid mode of transmission, which is a combination of satellite and terrestrial transmissions, and which is called (c) Devas Technology but none of which existed at the relevant point of time or even thereafter; (viii) Devas did not even hold necessary intellectual property rights in this regard though they claimed to have applied; (ix) That the formation of the company, namely, Devas Multimedia Private Limited was for a fraudulent and unlawful purpose is borne out by the fact that the company was incorporated in December-2004, as a result of preliminary meetings held at Bangalore in March-2003 and in USA in May-2003, followed by the signing of the MoU on 28.07.2003, the presentation made on 22.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atio of a particular decision, the Courts have applied the "inversion test" which has been propounded by Eugene Wambaugh, a Professor at the Harvard Law School, who published a classic text book called The Study of Cases in the year 1892. The Apex Court has taken aid of this test in State of Gujarat v. Utility Users' Welfare Assn (supra) wherein after applying the said test the Apex Court has held that in order to test whether a particular proposition of law is to be treated as the ratio decidendi of the case, the proposition is to be inversed i.e. to be removed from the text of the judgment as if it did not exist and if the conclusion of the case would still have been the same even without examining the proposition, then it cannot be regarded as the ratio decidendi of the case. The Apex Court has held that the test has been followed to imply that the ratio decidendi is what is absolutely necessary for the decision of the case. The Apex Court has also made reference to John Chipman Grey, another distinguished jurist who served as a Professor of Law at Harvard Law School, who has opined that for a proposition to be the ratio decidendi it must be an opinion, the formation of whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he context of deciding an application under Section 271(c) of the Companies Act, 2013, and, therefore, were in a completely different context which are inapplicable while deciding an application under Section 34 of the Arbitration Act and, therefore, are not binding, cannot be accepted. 76. Having dealt with the first aspect of the argument put forth by the Learned Senior Counsel for the Appellant-herein on the binding nature of the the judgment in Civil Appeal No.5766/2021, we shall now proceed to decide the second aspect of his submission that the principle of res judicata will not be applicable in the present case. It is trite law, that for the principle of res judicata to apply to the facts of a particular case, the following conditions must be fulfilled [See: Syed Mohd. Salie Labbai v. Mohd. Hanifa, (1976) 4 SCC 780; Srihari Hanumandas Totala v. Hemant Vithal Kamat, (2021) 9 SCC 99; and Jamia Masjid v. K.V. Rudrappa, (2022) 9 SCC 225]: a. There exists a former suit/proceeding between the same parties or between parties under whom any of them claim, litigating under the same title; b. The matter in the subsequent suit/proceeding was directly and substantially in issue in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st that is used for the identification of whether an issue has been conclusively decided in the previous suit is: A. Whether the adjudication of the issue was "necessary" for deciding on the principle issue ("the necessity test"); and B. Whether the judgment in the suit is based upon the decision on that issue ("the essentiality test")." 79. We shall now apply the principles discussed above to the facts of the present case. It cannot be denied that the Judgment of the Apex Court passed in Civil Appeal No.5766/2021 is a former proceeding between the same parties, i.e., Devas, DEMPL and Antrix. The proceedings in Civil Appeal No.5766/2021 and the present case arise out of the same factual matrix. The issue pertaining to the fraudulent actions of Devas is common in both cases. The question which arises is whether the observations made by the Apex Court in its Judgment passed in Civil Appeal No.5766/2021, pertaining to the effect of fraudulent actions of Devas will operate as res judicata and whether the learned Single Judge was correct in applying the principle of res judicata while deciding the application under Section 34 of the Arbitration Act. 80. One of the major contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us contract in question, in connivance and collusion with the then officials of Antrix; (ii) that it is not in dispute that at the time of entering into the contract, Devas did not have the technology, infrastructure or experience to perform their obligations under the Agreement; (iii) that one of the subscribers to the Memorandum of Association of the company in liquidation was an Auditor by name Shri M. Umesh, whose Article Clerk by name Gururaj was the one signed the Agreement; (iv) that the Executive Director of Antrix who signed the Agreement of behalf of Antrix is one of accused in the criminal cases; (v) that the incorporation of Devas was with fraudulent motive and unlawful object, to bring money into India and divert it by dubious methods; (vi) that even after the termination of the Agreement, Devas was not carrying on any business operations; (vii) that the objective of Devas was hardly to do any business except grabbing Primary Satellite-I (PS-I) and Primary Satellite-II (PS-II), and that therefore the requirements of Section 27l(c) stand satisfied. 12.5 The order of the Appellate Tribunal is in two parts; the first authored by Member (Judicial), and the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, which comes squarely within the ambit of Section 27l(c); (xvi) that Devas fraudulently approached FIPB through the ISP route to avoid scrutiny by Department of Space; (xvii) that the investors of Devas actually became shareholders and they also had their nominees on the Board of Devas; (xviii) that therefore these persons were also guilty of the conduct of the affairs of Devas in the manner stated; (xix) that the Share Subscription Agreement dated 06.03.2006 entered into with the investors contains a recital as though appropriate licences have been validly issued or assigned to the company, though in fact the only licence namely ISP licence was obtained much later on 02.05.2008 and (xx) that therefore the formation of the company and the conduct of the affairs of the company were fraudulent and the persons concerned therewith were also guilty of fraud. 12.6 In his independent but concurrent opinion the Member (Technical) of NCLAT classified the items of fraud into eight categories. He first found that the company was formed and the Agreement was entered into with the stated object of providing a bouquet of services, which were non-existent. The second category o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... van Nair, Chairman, ISRO and others that Shri Ramachandran Viswanathan, met the then Chairman of ISRO and other officials in Bangalore in April-2003 and they met once again in Washington D.C. during the visit of the then Chairman of ISRO. These meetings, which were not preceded by any invitation to the public for any Expression of Interest, culminated in a Memorandum of Understanding dated 28.07.2003. Though it is not clear where the MoU was signed, there are indications that it was signed overseas; (ii) It must be noted here that a one man Committee comprising of Dr. B.N. Suresh, former Member of the Space Commission and Director of Indian Institute of Space Science and Technology, was constituted on 8.12.2009, long after the commencement of the commercial relationship, to look comprehensively into all aspects of the contract, both commercial and technical. According to the Report submitted by him in May-2010, it was Forge Advisors, USA which made a presentation in March-2003, on technology aspects of digital multimedia services to Antrix/ISRO, followed by a presentation in May-2003 purportedly to the top management of Antrix/ ISRO. The MoU was signed thereafter; (iii) But the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through mobile phones was not in existence at that time, which is why the proposal made by Forge Advisors included an expectation that such a service may be launched by the end of 2006. It was with this expectation/promise that an Agreement was entered into on 28.01.2005 but this so-called new national service was never launched as promised in 2006. The launch of the services was not linked to the provision of a S-band satellite by Antrix, at least at the time when negotiations took place; (v) Admittedly, FIPB (Foreign Investment Promotion Board) approvals taken by Devas during the period May-2006 to September-2009 were on the basis of the ISP (Internet Service Provider) license secured from the Department of Telecommunications on 02.05.2008 and IPTV (Internet Protocol Television) services license obtained on 31.03.2009; (vi) Therefore, the finding of the Tribunal, (a) that a public largesse was doled out in favour of Devas, in contravention of the public policy in India; (b) that Devas enticed Antrix/ISRO to enter into an MoU followed by an Agreement by promising to provide something that was not in existence at that time and which did not come into existence even later; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e manipulated, highlighted by the Tribunal, also shows that the affairs of the company were conducted in a fraudulent manner. Thus, the second limb of Section 271(c), namely, the conduct of the affairs of the company in a fraudulent manner, also stood established. (xi) SATCOM Policy perceived telecommunication and broadcasting services to be independent of each other and also mutually exclusive. Therefore, a combination of both was not permitted by law. It is especially so since no deliberation took place with the Ministry of Information and Broadcasting. Moreover, unless ICC allocates space segment, to a private player, the same becomes unlawful. This is why the conduct of the affairs of the company became unlawful; (xii) That the officials of the Department of Space and Antrix were in collusion and that it was a case of fence eating the crop (and also allowing others to eat the crop), by joining hands with third parties, is borne out by the fact that the Note of the 104th Space Commission did not contain a reference to the Agreement. The Cabinet Note dated 17.11.2005 prepared after ten months of signing of the Agreement, did not make a mention about Devas or the Agreement, bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cope of Article 144 of the Constitution of India has been succinctly laid down by the Apex Court in Kantaru Rajeevaru (supra) wherein the Apex Court has held as under: "52. The position under our constitutional scheme is that the Supreme Court of India is the ultimate repository of interpretation of the Constitution. Once a Constitution Bench of five learned Judges interprets the Constitution and lays down the law, the said interpretation is binding not only as a precedent on all courts and tribunals, but also on the coordinate branches of Government, namely, the legislature and the executive. What follows from this is that once a judgment is pronounced by the Constitution Bench and a decree on facts follows, the said decree must be obeyed by all persons bound by it. In addition, Article 144 of the Constitution mandates that all persons who exercise powers over the citizenry of India are obliged to aid in enforcing orders and decrees of the Supreme Court. This then is the constitutional scheme by which we are governed -- the rule of law, as laid down by the Indian Constitution." (emphasis supplied) 84. The Supreme Court is the Final Court and once the Supreme Court lays down a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in an ongoing proceedings. He has also argued that under the scheme of Section 34 of the Arbitration Act, it is not necessary for a party to specifically plead any of the grounds under Section 34(2)(b) or Section 34(2A), provided an application under Section 34 is made. He, therefore, submits that the learned Single Judge has correctly set aside the ICC award under Section 34 of the Arbitration Act on the grounds of fraud and it being in conflict with the public policy of India. 87. Section 34 of the Arbitration Act reads as under: "Section 34. Application for setting aside arbitral awards. (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and subsection (3). (2) An arbitral award may be set aside by the Court only if-- (a) the party making the application 1[establishes on the basis of the record of the arbitral tribunal that]-- (i) a party was under some incapacity, or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which that request had been disposed of by the arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter. (4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award. (5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement. (6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub-section (5) is served upon the other party.]" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by either party, then fraud would play no part in the proceedings at all. The appellants produced no authority for the proposition that an award can be "tainted" by fraud when fraud was neither an issue in the arbitration nor involved in an external manner in the procurement of the award (eg, by bribery of a witness to give false evidence). Nor did they give any example of a situation in which an arbitration award was set aside for fraud even though there was no causative link between the fraud and the ultimate award. 42 In our judgment, the word "affected" must be understood in a manner similar to "induced" albeit perhaps somewhat more broadly. It would be going too far, however, to give the word "affected" such a wide definition as to allow an award to be set aside if the challenging party can merely show some peripheral fraud in the circumstances relating to a case or the parties notwithstanding that that fraud played no part in the conduct of the arbitration or the making of the award. The party challenging the award on grounds of fraud must show a connection between the alleged fraud and the making of the arbitral award. Absent such a connection, s 24 of the IAA would not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Article V of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (hereinafter referred to as "the New York Convention"), which is phrased in a similar manner to Section 34 & 48 of the Arbitration Act. The Court in its decision, interpreted "public policy" in the following terms: "32. With regard to enforcement of foreign judgments, the position at common law is that a foreign judgment which is final and conclusive cannot be impeached for any error either of fact or of law and is impeachable on limited grounds, namely, the court of the foreign country did not, in the circumstances of case, have jurisdiction to give that judgment in the view of English law; the judgment is vitiated by fraud on part of the party in whose favour the judgment is given or fraud on the part of the court which pronounced the judgment; the enforcement or recognition of the judgment would be contrary to public policy; the proceedings in which the judgment was obtained were opposed to natural justice. (See : Dicey & Morris, The Conflict of Laws, 11th Edn., Rules 42 to 46, pp. 464 to 476; Cheshire & North, Private International Law, 12th Edn., pp. 368 to 392.) 33. Similarl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In our opinion the said expression must be construed to mean the doctrine of public policy as applied by the courts in which the foreign award is sought to be enforced. Consequently, the expression 'public policy' in Section 7(1)(b)(ii) of the Foreign Awards Act means the doctrine of public policy as applied by the courts in India. This raises the question whether the narrower concept of public policy as applicable in the field of public international law should be applied or the wider concept of public policy as applicable in the field of municipal law. ***** 66. Article V(2)(b) of the New York Convention of 1958 and Section 7(1)(b)(ii) of the Foreign Awards Act do not postulate refusal of recognition and enforcement of a foreign award on the ground that it is contrary to the law of the country of enforcement and the ground of challenge is confined to the recognition and enforcement being contrary to the public policy of the country in which the award is set to be enforced. There is nothing to indicate that the expression "public policy" in Article V(2)(b) of the New York Convention and Section 7(1)(b)(ii) of the Foreign Awards Act is not used in the same sense in which it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ublic policy of India. It went on further to hold that a contravention of the provisions of the Foreign Exchange Regulation Act would be contrary to the public policy of India in that the statute is enacted for the national economic interest to ensure that the nation does not lose foreign exchange which is essential for the economic survival of the nation (see SCC p. 685, para 75). Equally, disregarding orders passed by the superior courts in India could also be a contravention of the fundamental policy of Indian law, but the recovery of compound interest on interest, being contrary to statute only, would not contravene any fundamental policy of Indian law (see SCC pp. 689 & 693, paras 85 & 95). 19. When it came to construing the expression "the public policy of India" contained in Section 34(2)(b)(ii) of the Arbitration Act, 1996, this Court in ONGC Ltd. v. Saw Pipes Ltd. [(2003) 5 SCC 705 : AIR 2003 SC 2629] held: (SCC pp. 727-28 & 744-45, paras 31 & 74) "31. Therefore, in our view, the phrase 'public policy of India' used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties, or (b) failing such agreement, the arbitral procedure was not in accordance with Part I of the Act. However, exception for setting aside the award on the ground of composition of Arbitral Tribunal or illegality of arbitral procedure is that the agreement should not be in conflict with the provisions of Part I of the Act from which parties cannot derogate. (c) If the award passed by the Arbitral Tribunal is in contravention of the provisions of the Act or any other substantive law governing the parties or is against the terms of the contract. (3) The award could be set aside if it is against the public policy of India, that is to say, if it is contrary to: (a) fundamental policy of Indian law; or (b) the interest of India; or (c) justice or morality; or (d) if it is patently illegal. (4) It could be challenged: (a) as provided under Section 13(5); and (b) Section 16(6) of the Act. (B)(1) The impugned award requires to be set aside mainly on the grounds: (i) there is specific stipulation in the agreement that the time and date of delivery of the goods was of the essence of the contract; (ii) in case of failure to deliver the goods within the peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... award may be set aside by the court only if-- (a) the party making the application furnishes proof that-- *** (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case;" 31. The third juristic principle is that a decision which is perverse or so irrational that no reasonable person would have arrived at the same is important and requires some degree of explanation. It is settled law that where: (i) a finding is based on no evidence, or (ii) an Arbitral Tribunal takes into account something irrelevant to the decision which it arrives at; or (iii) ignores vital evidence in arriving at its decision, such decision would necessarily be perverse. 32. A good working test of perversity is contained in two judgments. In Excise and Taxation Officer-cum-Assessing Authority v. Gopi Nath & Sons [1992 Supp (2) SCC 312] , it was held: (SCC p. 317, para 7) "7. … It is, no doubt, true that if a finding of fact is arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant material or if the finding so outrageously defie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... award of an Arbitral Tribunal by reassessing or reappreciating the evidence. An award can be challenged only under the grounds mentioned in Section 34(2) of the Act. The Arbitral Tribunal has examined the facts and held that both the second respondent and the appellant are liable. The case as put forward by the first respondent has been accepted. Even the minority view was that the second respondent was liable as claimed by the first respondent, but the appellant was not liable only on the ground that the arbitrators appointed by the Stock Exchange under Bye-law 248, in a claim against a non-member, had no jurisdiction to decide a claim against another member. The finding of the majority is that the appellant did the transaction in the name of the second respondent and is therefore, liable along with the second respondent. Therefore, in the absence of any ground under Section 34(2) of the Act, it is not possible to re-examine the facts to find out whether a different decision can be arrived at." 34. It is with this very important caveat that the two fundamental principles which form part of the fundamental policy of Indian law (that the arbitrator must have a judicial approach a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to this ground (in 1802) is the ground that an arbitral award would be set aside if there were an error of law by the arbitrator. This is explained by Denning, L.J. in R. v. Northumberland Compensation Appeal Tribunal, ex p Shaw [(1952) 1 All ER 122 : (1952) 1 KB 338 (CA)] : (All ER p. 130 D-E : KB p. 351) "Leaving now the statutory tribunals, I turn to the awards of the arbitrators. The Court of King's Bench never interfered by certiorari with the award of an arbitrator, because it was a private tribunal and not subject to the prerogative writs. If the award was not made a rule of court, the only course available to an aggrieved party was to resist an action on the award or to file a bill in equity. If the award was made a rule of court, a motion could be made to the court to set it aside for misconduct of the arbitrator on the ground that it was procured by corruption or other undue means (see Statutes 9 and 10 Will. III, C. 15). At one time an award could not be upset on the ground of error of law by the arbitrator because that could not be said to be misconduct or undue means, but ultimately it was held in Kent v. Elstob [(1802) 3 East 18 : 102 ER 502] , that an award co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e mistake was is by saying: 'Inasmuch as the arbitrators awarded so and so, and inasmuch as the letter shows that the buyer rejected the cotton, the arbitrators can only have arrived at that result by totally misinterpreting Rule 52.' But they were entitled to give their own interpretation to Rule 52 or any other article, and the award will stand unless, on the face of it they have tied themselves down to some special legal proposition which then, when examined, appears to be unsound. Upon this point, therefore, Their Lordships think that the judgment of Pratt, J. was right and the conclusion of the learned Judges of the Court of Appeal [Jivraj Baloo Spg. and Wvg. Co. Ltd. v. Champsey Bhara and Co., ILR (1920) 44 Bom 780. The judgment of Pratt, J. may be referred to at ILR p. 787.] erroneous." This judgment has been consistently followed in India to test awards under Section 30 of the Arbitration Act, 1940." 94. Subsequent to the decision in Associated Builders (supra), the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter referred to as "the 2015 Amendment Act") was enacted which amended Section 34 of the Arbitration Act. The Apex Court in Ssangyong (supra), inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], or secondly, that such award is against basic notions of justice or morality as understood in paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204]. Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12], as understood in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], and paras 28 and 29 in particular, is now done away with. 37. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2-A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds, 1958 (the New York Convention), which is almost in the same terms as Sections 34 and 48 of the 1996 Act, the said judgment is of great importance in understanding the parameters of judicial review when it comes to either foreign awards or international commercial arbitrations being held in India, the grounds for challenge/refusal of enforcement under Sections 34 and 48, respectively, being the same." 95. The above decisions have been recently followed in Delhi Airport Metro Express (P) Ltd. v. Delhi Metro Rail Corporation Limited, (2022) 1 SCC 131, wherein the Court observed as under: "28. This Court has in several other judgments interpreted Section 34 of the 1996 Act to stress on the restraint to be shown by Courts while examining the validity of the arbitral awards. The limited grounds available to Courts for annulment of arbitral awards are well known to legally trained minds. However, the difficulty arises in applying the well-established principles for interference to the facts of each case that come up before the Courts. There is a disturbing tendency of Courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ward is liable to be set aside. Explanation (1), amended by the 2015 Amendment Act, clarified the expression "public policy of India" and its connotations for the purposes of reviewing arbitral awards. It has been made clear that an award would be in conflict with public policy of India only when it is induced or affected by fraud or corruption or is in violation of Section 75 or Section 81 of the 1996 Act, if it is in contravention with the fundamental policy of Indian law or if it is in conflict with the most basic notions of morality or justice. 31. In Ssangyong [Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 : (2020) 2 SCC (Civ) 213] , this Court held that the meaning of the expression "fundamental policy of Indian law" would be in accordance with the understanding of this Court in Renusagar Power Co. Ltd. v. General Electric Co. [Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644]. In Renusagar [Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644], this Court observed that violation of the Foreign Exchange Regulation Act, 1973, a statute enacted for the "national economic interest", and disregarding the superior Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no amendment in the application for setting aside the award howsoever material or relevant it may be for consideration by the court can be added nor existing ground amended after the prescribed period of limitation has expired although the application for setting aside the arbitral award has been made in time. This is not and could not have been the intention of the legislature while enacting Section 34. 30. More so, Section 34(2)(b) enables the court to set aside the arbitral award if it finds that the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force or the arbitral award is in conflict with the public policy of India. The words in clause (b) "the court finds that" do enable the court, where the application under Section 34 has been made within prescribed time, to grant leave to amend such application if the very peculiar circumstances of the case so warrant and it is so required in the interest of justice. 31.L.J. Leach & Co. Ltd. [AIR 1957 SC 357 : 1957 SCR 438] and Pirgonda Hongonda Patil [AIR 1957 SC 363 : 1957 SCR 595] , seem to enshrine clearly that courts would, as a rule, decline to allow amendments, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of new grounds in the memorandum of arbitration appeal. 36. As noticed above, in the application for setting aside the award, the appellant set up only five grounds viz. waiver, acquiescence, delay, laches and res judicata. The grounds sought to be added in the memorandum of arbitration appeal by way of amendment are absolutely new grounds for which there is no foundation in the application for setting aside the award. Obviously, such new grounds containing new material/facts could not have been introduced for the first time in an appeal when admittedly these grounds were not originally raised in the arbitration petition for setting aside the award. Moreover, no prayer was made by the appellant for amendment in the petition under Section 34 before the court concerned or at the appellate stage. 37. As a matter of fact, the learned Single Judge in para 6 of the impugned order has observed that the grounds of appeal which are now sought to be advanced were not originally raised in the arbitration petition and that the amendment that is sought to be effected is not even to the grounds contained in the application under Section 34 but to the memo of appeal. In the circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2010) 4 SCC 518 : (2010) 2 SCC (Civ) 207] is found to be misplaced. In the aforesaid case, the Court was required to examine whether in an appeal preferred under Section 37 of the 1996 Act against an order refusing to set aside an award, permission could be granted to amend the memo of appeal to raise additional/new grounds. Answering the said question, it was held that though an application for setting aside the arbitral award under Section 34 of the 1996 Act had to be moved within the time prescribed in the statute, it cannot be held that incorporation of additional grounds by way of amendment in the Section 34 petition would amount to filing a fresh application in all situations and circumstances, thereby barring any amendment, however material or relevant it may be for the consideration of a Court, after expiry of the prescribed period of limitation. In fact, laying emphasis on the very expression "the Court finds that" applied in Section 34(2)(b) of the 1996 Act, it has been held that the said provision empowers the Court to grant leave to amend the Section 34 application if the circumstances of the case so warrant and it is required in the interest of justice. This is what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is ongoing. While the proceedings in the underlying Section 34 Petition were pending, the Supreme Court has upheld the decision of the NCLT and NCLAT to wind up Devas on the grounds that it was formed for a fraudulent and unlawful purpose and the affairs of Devas have been conducted in a fraudulent manner. The Hon'ble Supreme Court in its Judgment passed in Civil Appeal No.5766/2021 has confirmed certain finding on facts, which have attained finality and are binding upon the parties and this Court on the basis of these findings, the following observations can be arrived at: 101.1. It is well established that Devas was incorporated with fraudulent intentions, so that it could enter into the Devas Agreement with Antrix. Devas could manage to do so, only by conniving and colluding with the then officials of Antrix, which assisted Devas in entering into the Devas Agreement. The collusion between the officials of DoS and Antrix is borne out from the Note for the 104th Space Commission which did not contain any references to the Devas Agreement. The Cabinet Note dated 17.11.2005, which were prepared ten (10) months after the signing of the Devas Agreement, did not make any mention abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fraud that it permeates through every agreement, transaction or award entered into by Devas. The fraud propagated by Devas is not only against Respondent No. 1, but against the State as a whole, inasmuch as it attempts to obtain monetary benefits from the State itself, by attempting to enforce an arbitral award, which itself is arising out of fraud. A fraud of such scale would certainly render the award to be in conflict with the public policy of India. 103. In view of the aforestated judgments, specific amendments to Section 34 of the Arbitration Act, and in view of the categorical findings of the Apex Court in its Judgment passed in Civil Appeal No.5766/2021, nothing prevented the learned Single Judge from relying on those findings and using them for the purpose of setting aside the ICC Award under Section 34 of the Arbitration Act on the ground that the agreement itself was a product of fraud and, therefore, the making of award is automatically induced by fraud and corruption. The findings by the Apex Court, which is the highest Court of the land, could not have been ignored by the learned Single Judge and those findings would automatically become the findings of the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of England about three centuries ago. It is the settled proposition of law that a judgment or decree obtained by playing fraud on the court is a nullity and non est in the eyes of law. Such a judgment/decree -- by the first court or by the highest court -- has to be treated as a nullity by every court, whether superior or inferior. It can be challenged in any court even in collateral proceedings. XXX 5. The High Court, in our view, fell into patent error. The short question before the High Court was whether in the facts and circumstances of this case, Jagannath obtained the preliminary decree by playing fraud on the court. The High Court, however, went haywire and made observations which are wholly perverse. We do not agree with the High Court that "there is no legal duty cast upon the plaintiff to come to court with a true case and prove it by true evidence". The principle of "finality of litigation" cannot be pressed to the extent of such an absurdity that it becomes an engine of fraud in the hands of dishonest litigants. The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands. We are constrained to say th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of advantage to the party himself or from ill will towards the other is immaterial. The expression "fraud" involves two elements, deceit and injury to the person deceived. Injury is something other than economic loss, that is, deprivation of property, whether movable or immovable or of money and it will include any harm whatever caused to any person in body, mind, reputation or such others. In short, it is a noneconomic or non-pecuniary loss. A benefit or advantage to the deceiver, will almost always cause loss or detriment to the deceived. Even in those rare cases where there is a benefit or advantage to the deceiver, but no corresponding loss to the deceived, the second condition is satisfied. [See Vimla (Dr.) v. Delhi Admn. [1963 Supp (2) SCR 585 : AIR 1963 SC 1572] and Indian Bank v. Satyam Fibres (India) (P) Ltd. [(1996) 5 SCC 550] ] 10. A "fraud" is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage. (See S.P. Chengalvaraya Naidu v. Jagannath [(1994) 1 SCC 1].) 11. "Fraud" as is well known vitiates every sole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts effect. Before the land acquisition had been commenced in 1987, the land more than 1000 bighas had been declared a surplus in ceiling case and compensation collected, which indeed (quaere included) disputed land at Jhakari, it would be a perpetuating fraud in case such a person is permitted to claim compensation for same very land. Fraud vitiates the solemn proceedings; such plea can be set up even in collateral proceedings. The label on the petition is not much material and this Court has already permitted the plea of fraud to be raised. Moreover, the appeal arising out of 72 awards is still pending in the High Court in which Reference Court has declined compensation on the aforesaid ground. xxx 68. Fraud vitiates every solemn proceeding and no right can be claimed by a fraudster on the ground of technicalities. On behalf of the appellants, reliance has been placed on the definition of "fraud" as defined in Black's Law Dictionary, which is as under: "Fraud : (1) A knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment. Fraud is usually a tort, but in some cases (esp. when the conduct is wilful) it ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onscience. 112. At the cost of repetition, paragraphs 13.5 and 13.6 of the Civil Appeal No.5766/2021 are binding upon the Ld. Single Judge and this Court. Thus, the observations made therein, which are based upon the principle of "fraud vitiates all solemn acts", are not only correct in law, but also binding upon the Ld. Single Judge and this Court. We, therefore, see no infirmity in the Impugned Judgment, wherein the Ld. Single Judge has relied upon paragraphs No.13.5 and 13.6 of the Judgment of the Apex Court passed in Civil Appeal No.5766/2021 to set aside the ICC Award. 113. It would be against the principles of justice, equity and good conscience to permit Devas to reap the benefits of the ICC Award, and permitting Devas to do so would amount to this Court perpetuating the fraud. CONCLUSION: 114. To summarize: a) The findings of the Apex Court in its Judgment in Civil Appeal No.5766/2021 while upholding the findings of the NCLT and NCLAT, noted that Devas was incorporated for a fraudulent purpose and that its affairs were being conducted in a fraudulent manner. The Apex Court has given these findings after being aware of the fact that an arbitral award has been passed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered by the Apex Court, it was not open for the learned Single Judge to come to the conclusion that the award, which has been held to be a product of fraud, would still be enforceable in the country. Such a finding by the learned Single Judge would be against the spirit of Article 144 of the Constitution of India. d) The phrase "the Court finds that", which finds mention in Section 34(2)(b) of the Arbitration Act, enables the Court to look into attendant circumstances to form its own opinion as to whether the award is in conflict with public policy of India or not. As a corollary, it follows that the Court would also have the power to discover on its own, whether the making of an award is induced or affected by fraud or corruption or is in violation of Section 75 or 81 of the Arbitration Act. This phrase has been interpreted by the Court, as an enabling provision, allowing the Court while deciding an application under Section 34 of the Arbitration Act to grant leave to amend an application under Section 34 of the Arbitration Act, if the peculiar circumstances of the case so warrant and it is so required in the interest of justice. e) In view of the various Judgments of the Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X
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